Insight

When can an individual be liable for unpaid wages under the FLSA?

When can an individual be liable for unpaid wages under the FLSA?

Greg Mansell

Greg Mansell

October 29, 2019 06:40 PM

When can an individual be considered an “employer” under the Fair Labor Standards Act?

Under the Fair Labor Standards Act (FLSA), an employer must pay its employees for all hours worked. The term “employer” is very broad; it includes both companies and individuals “acting directly or indirectly in the interest of an employer in relation to an employee.”[1] An employee can have two or more employers that meet this definition, such as the company itself and an individual that represents the company (typically the company’s owner or upper-level manager). Both the company and the individual can be held liable under the FLSA for wage violations.

Individuals are considered “employers” under the FLSA if they meet the requirements of the “Economic Reality” test. This test looks to whether the individual has significant ownership interests and operational control over the company, such that he or she could cause the company to violate the FLSA. The individual need not have exclusive control over the company to be considered an employer under the FLSA; instead, he or she need only have control over “significant aspects” of the company’s operations.[2]

There are a number of factors courts evaluate in order to make this determination:

  • How much control does the individual have over employees’ work?
    • Is the person frequently on-site supervising the employee?
    • Does the person make employee schedules?
    • Does the person control the employee’s normal day-to-day activities?
    • Does the person decide how the employee is paid?
  • Does the person dictate workplace policies and practices?
    • Does the person have the ability to hire and fire employees?
    • Does the person write the employee handbook or other workplace policies?
    • Is the person responsible for handling employee payroll?
  • Generally, is the person the “top man” at the company?
    • Does the company function primarily for the individual’s personal benefit?
    • Does the person have “ultimate decision-making power” over important company decisions?

No one factor will determine whether an individual is an employer for purposes of the FLSA, so all the surrounding circumstances must be considered to make this determination. Moreover, the individual must not only possess but also exercise control over these specific duties; simply holding a position of authority is not sufficient to confer employer liability under the FLSA.

How does this affect a claim for unpaid wages?

Generally, individuals cannot be held liable under the FLSA. However, if an individual is considered an “employer,” then they are liable for unpaid wages under the FLSA. Individual employers are “jointly and severally” liable with the company they represent, meaning that an employee can collect unpaid wages from the company, the individual, or both.

Each situation is different, and a thorough review of the facts may be required to determine if you are employed in a role that may subject you to personal liability as an employer under the FLSA. If you have questions regarding your job duties or about your wages and employment generally, please reach out for a free consultation.

Mansell Law LLC

Overtime Lawyers in Ohio


[1] 29 U.S.C. § 203(d).

[2] Donovan v. Agnew, 712 F.2d 1509, 1514 (1st Cir. 1983).

Related Articles

Attacked From All Sides: What Is Happening in the World of Restrictive Covenants?


by Christine Bestor Townsend

One employment lawyer explains how companies can navigate challenges of federal and state governmental scrutiny on restrictive covenant agreements.

Illustration of two men pulling on string with blue door between them

IN PARTNERSHIP

The Long, Short, Thick and Thin of It


by Avrohom Gefen

“Appearance discrimination” based on employees’ height and weight is the latest hot-button issue in employment law. Here’s a guide to avoid discrimination.

Woman stands in front of mirror holding suit jacket

IN PARTNERSHIP

Businesses Must Prepare for the New Department of Labor Independent Contractor Rule


by Kirby Black and Steven T. Clark

Two employment law lawyers explain how a new DOL rule making it more likely workers will be classified as employees, rather than independent contractors, has caused legal challenges and prompted businesses to reassess worker status and policies.

Block with outline of person slightly out of place from other blocks

The Employment Pandemic


by Meredith Caiafa and Sarah Greene

The pandemic has had far-reaching effects on employment law since it officially took hold in 2020, but the litigation and lawmaking surrounding it are mutating faster than the variants. Here’s how lawmakers and businesses can keep up.

Employment Law During COVID-19

Destiny Fulfilled


by Sara Collin

Was Angela Reddock-Wright destined to become a lawyer? It sure seems that way. Yet her path was circuitous. This accomplished employment attorney, turned mediator, arbitrator and ADR specialist nonpareil discusses her career, the role of attorneys in society, the new world of post-pandemic work and why new Supreme Court Justice Ketanji Brown Jackson represents the future.

Interview with Lawyer Angela Reddock-Wright

Major Change to FLSA Procedure


by Greg Mansell

The Sixth Circuit will determine if a major procedural change is warranted for employees seeking unpaid wages.

Procedural Changes for Unpaid Employees

NYC Pay Transparency Law Gets New Start Date


by Justin Smulison

This historic law regarding pay transparency in New York City originally scheduled to take effect last week was rescheduled to Fall 2022.

NYC Stand Resolute on Pay Transparency

Wage and Overtime Laws for Truck Drivers


by Greg Mansell

For truck drivers nationwide, underpayment and overtime violations are just the beginning of a long list of problems. Below we explore the wages you are entitled to but may not be receiving.

Truck Driver Wage and Overtime Laws in the US

Evolving Marijuana Laws and the Workplace


by Tess P. Anglin

How can employers enforce statutes that differ from state to state?

Red image of a marijuana leaf

Nina T. Pirrotti - New Haven 2020 Lawyer of the Year


by Best Lawyers

Employment Law - Individuals New Haven, Connecticut

Nina Pirrotti

WATCH: A Landmark Win for LGBTQ Rights


by Best Lawyers

Two top employment attorneys join the CEO of Best Lawyers to discuss the landmark Supreme Court ruling protecting gay and transgender employees.

Panel: LGBTQ SCOTUS Ruling

Paula Greisen - Denver 2020 Lawyer of the Year


by Best Lawyers

Litigation - Labor and Employment Denver, CO

Paula Greisen

The Best Defense Against FLSA Lawsuits for Unpaid Overtime


by Maureen E. Carr

Six strategies to avoid costly liability.

Gun shots on target practice

In the News: Georgia


by Nicole Ortiz

A summary of newsworthy content from Colorado lawyers and law firms.

In the News Georgia 2018

The Impact of Duran on the Certification Process in Wage and Hour Class Actions


by Tim Freudenberger and Nancy Lubrano

In May 2014, class action defense attorney Tim Freudenberger from Carothers DiSante & Freudenberger LLP, obtained a very favorable decision from the California Supreme Court in Duran v. U.S. Bank Nat. Assn., 59 Cal. 4th 1 (2014).

Wage and Hour Class Actions

Trending Articles

The 2024 Best Lawyers in Spain™


by Best Lawyers

Best Lawyers is honored to announce the 16th edition of The Best Lawyers in Spain™ and the third edition of Best Lawyers: Ones to Watch in Spain™ for 2024.

Tall buildings and rushing traffic against clouds and sun in sky

Presenting The Best Lawyers in Australia™ 2025


by Best Lawyers

Best Lawyers is proud to present The Best Lawyers in Australia for 2025, marking the 17th consecutive year of Best Lawyers awards in Australia.

Australia flag over outline of country

Best Lawyers Expands Chilean 2024 Awards


by Best Lawyers

Best Lawyers is pleased to announce the 14th edition of The Best Lawyers in Chile™ and the inaugural edition of Best Lawyers: Ones to Watch in Chile™, honoring the top lawyers and firms conferred on by their Chilean peers.

Landscape of city in Chile

Best Lawyers Expands 2024 Brazilian Awards


by Best Lawyers

Best Lawyers is honored to announce the 14th edition of The Best Lawyers in Brazil™ and the first edition of Best Lawyers: Ones to Watch in Brazil™.

Image of Brazil city and water from sky

Announcing The Best Lawyers in South Africa™ 2024


by Best Lawyers

Best Lawyers is excited to announce the landmark 15th edition of The Best Lawyers in South Africa™ for 2024, including the exclusive "Law Firm of the Year" awards.

Sky view of South Africa town and waterways

The Best Lawyers in Mexico Celebrates a Milestone Year


by Best Lawyers

Best Lawyers is excited to announce the 15th edition of The Best Lawyers in Mexico™ and the second edition of Best Lawyers: Ones to Watch in Mexico™ for 2024.

Sky view of Mexico city scape

How Palworld Is Testing the Limits of Nintendo’s Legal Power


by Gregory Sirico

Many are calling the new game Palworld “Pokémon GO with guns,” noting the games striking similarities. Experts speculate how Nintendo could take legal action.

Animated figures with guns stand on top of creatures

The Best Lawyers in Portugal™ 2024


by Best Lawyers

The 2024 awards for Portugal include the 14th edition of The Best Lawyers in Portugal™ and 2nd edition of Best Lawyers: Ones to Watch in Portugal™.

City and beach with green water and blue sky

The Best Lawyers in Peru™ 2024


by Best Lawyers

Best Lawyers is excited to announce the landmark 10th edition of The Best Lawyers in Peru, the prestigious award recognizing the country's lop legal talent.

Landscape of Peru city with cliffside and ocean

How To Find A Pro Bono Lawyer


by Best Lawyers

Best Lawyers dives into the vital role pro bono lawyers play in ensuring access to justice for all and the transformative impact they have on communities.

Hands joined around a table with phone, paper, pen and glasses

Presenting the 2024 Best Lawyers Family Law Legal Guide


by Best Lawyers

The 2024 Best Lawyers Family Law Legal Guide is now live and includes recognitions for all Best Lawyers family law awards. Read below and explore the legal guide.

Man entering home and hugging two children in doorway

The Best Lawyers in Colombia™ 2024


by Best Lawyers

Best Lawyers is honored to announce the 14th edition of The Best Lawyers in Colombia™ for 2024, which honors Colombia's most esteemed lawyers and law firms.

Cityscape of Colombia with blue cloudy sky above

Announcing the 2024 Best Lawyers in Puerto Rico™


by Best Lawyers

Best Lawyers is proud to announce the 11th edition of The Best Lawyers in Puerto Rico™, honoring the top lawyers and firms across the country for 2024.

View of Puerto Rico city from the ocean

Announcing The Best Lawyers in Japan™ 2025


by Best Lawyers

For a milestone 15th edition, Best Lawyers is proud to announce The Best Lawyers in Japan.

Japan flag over outline of country

Announcing The Best Lawyers in New Zealand™ 2025 Awards


by Best Lawyers

Best Lawyers is announcing the 16th edition of The Best Lawyers in New Zealand for 2025, including individual Best Lawyers and "Lawyer of the Year" awards.

New Zealand flag over image of country outline

Canada Makes First Foray Into AI Regulation


by Sara Collin

As Artificial Intelligence continues to rise in use and popularity, many countries are working to ensure proper regulation. Canada has just made its first foray into AI regulation.

People standing in front of large, green pixelated image of buildings